Climate Finance Provided and Mobilised by Developed Countries in 2013-2021

Aggregate trends of climate finance provided and mobilised

Accounting framework and scope

OECD analyses and assessments of progress towards the USD 100 billion goal are based on best-available data and a robust accounting framework. This framework is consistent with the agreed outcome of COP24 as regards the funding sources and financial instruments for reporting information on financial support provided and financial support mobilised through public interventions. OECD figures capture four distinct components of climate finance provided and mobilised by developed countries:

• Bilateral public climate finance provided by developed countries’ institutions, notably bilateral aid agencies and development banks,

• Multilateral public climate finance provided by multilateral development banks and multilateral climate funds, attributed to developed countries,

• Climate-related officially supported export credits, provided by developed countries' official export credit agencies, and

• Private finance mobilised by bilateral and multilateral public climate finance, attributed to developed countries.

These four components are captured drawing on three sources of official activity-level data reported by bilateral and multilateral providers of climate finance. Table 1 summarises the different time lags in the availability of the relevant data, which accounts for the time required each year to produce verified and quality-assured figures of progress toward the USD 100 billion goal. Producing aggregate figures within a shorter timeframe requires international providers to report ahead of official reporting arrangements. This applies in particular to bilateral providers, as under the UNFCCC Enhanced Transparency Framework (ETF) reporting rules, there would be a 3–4-year time lag between the reported year and when information is made available.

Table 1. Overview of time lags in availability of official climate finance data

Dataset	Source	2019	2020	2021	2022	2023	2024	2025
Bilateral public	UNFCCC	Q1 2022	Q1 2022	Q1 2025	Q1 2025	Q1 2027	Q1 2027	Q1 2029
Multilateral public	OECD DAC	Q1 2021		Q1 2023	Q1 2024	Q1 2025	Q1 2026	Q1 2027
Export credits	OECD ECG
Mobilised private	OECD DAC

Note: DAC: Development Assistance Committee; ECG: Export Credit Group. The timing indicated relates to standard reporting and quality assurance practices. Experience shows that some countries and institutions typically report earlier, while others experience delays. Starting in 2024, reporting to the UNFCCC is to be based on the Paris Agreement’s Enhanced Transparency Framework (ETF); while the implementation of the ETF is intended to result in more climate finance data being reported to the UNFCCC (e.g. on private finance mobilised), it also increased time lags as relevant Parties are to report at the end of every second year rather than the start of such year under pre-ETF arrangements.

Detailed information on the methodologies used to account for climate finance provided and mobilised towards the USD 100 billion goal are presented in Annex A of (OECD, 2022[2]). Two annexes to this report provide a selection of important methodological elements relating to the geographical scope of the USD 100 billion goal:

• Annex A provides a full list of individual countries considered respectively as developed countries (providers) and developing countries (beneficiaries).

• Annex B presents the percentages calculated by the OECD to account for the share of finance attributable to developed countries that is provided and mobilised by multilateral institutions.

The scope of the USD 100 billion goal means it does not capture all finance for climate action in developing countries. Due to the goal’s geographical scope, the figures do not include developing countries' domestic public climate finance, bilateral public climate finance between developing countries in the context of so-called “South-South” cooperation, or multilateral and mobilised private climate finance attributable to developing countries themselves. Further, the figures presented include neither private finance catalysed by public policy interventions, for which precise measurement is not possible, nor private finance invested in the absence of public interventions altogether.

Progress towards the goal and contribution of each component

In 2021, total climate finance provided and mobilised by developed countries for developing countries amounted to USD 89.6 billion, showing a significant 7.6% increase over the previous year (Figure 1). This increase is significantly higher than the 2.1% average annual growth observed from 2018 to 2020. However, this result remained USD 10.4 billion short of the USD 100 billion annual goal, that was to be reached by 2020.

Looking at trends for the different components over the available period:

• Public climate finance (bilateral and multilateral) continued to account for the vast majority of the total. It almost doubled between 2013 and 2021 (from USD 38 billion to USD 73.1 billion) and has increased consistently year on year since 2015. Within public climate finance, multilateral public climate finance attributable to developed countries has grown the most since 2013, overtaking bilateral public climate finance from 2019.

• Climate-related export credits increased by 28% over 2013-21, but their year-on-year volumes remain volatile and their share in the total small.

• Mobilised private climate finance, for which comparable data are only available from 2016, amounted to USD 14.4 billion in 2021, thereby returning to its 2019 level after a dip in 2020. This component, however, displays an overall stagnating trend since 2017, despite the significant growth in public climate finance highlighted above. To counter this, the second part of this report summarises a selection of key opportunities for international climate finance providers to improve their effectiveness in mobilising private finance.

Figure 1. Climate finance provided and mobilised in 2013-2021 (USD billion)

Note: Figures may not add up to totals due to rounding. The gap in time series in 2015 for mobilised private finance results from the implementation of improved measurement methodologies in OECD data collections from 2016 onwards. These improved methodologies measure the mobilisation effect of public interventions, taking into account the specific mechanisms employed to attract investments from the private sector, such as guarantees, collective investment vehicles, syndicated loans or project finance. Such an instrument-specific and granular approach is not fully compatible with the estimates developed for 2013-14. As a result, volumes of private finance mobilised and grand totals in 2016-18 and in 2013-14 respectively are not directly comparable.

Source: Based on Biennial Reports to the UNFCCC, OECD Development Assistance Committee and Export Credit Group statistics, as well as complementary reporting to the OECD.

Climate themes and sectors

Climate finance provided and mobilised for all three categories of mitigation, adaptation and cross-cutting grew in absolute terms over 2016-2021 (Figure 2).1 In 2021, however, adaptation finance dropped by USD 4 billion (-14%) compared to 2020, while mitigation and cross-cutting finance increased by USD 5.1 billion (+11%) and USD 5.2 billion (+86%) respectively. As a result, in 2021, mitigation continued to represent the majority (60%) of total climate finance provided and mobilised, adaptation 27% and cross-cutting 13%. Low levels of adaptation finance in both absolute and relative terms represent a bottleneck identified by both developing and developed countries. In this context, the second part of the report provides a selection of key opportunities for scaling up finance for adaptation and resilience.

Between 2016 and 2021, almost two-thirds of total climate finance provided and mobilised targeted four key sectors: energy (31%), transport and storage (14%), agriculture, forestry, and fishing (9%), and water supply and sanitation (8%). Over the six-year period, the sectoral split remained overall stable, with the exception of the share of climate finance targeting the energy sector, which progressively decreased from 38% in 2016 to 26% in 2021. As highlighted in the second part of the report, international climate finance providers could better reflect changing commercial dynamics in key sectors by tailoring their interventions both to mobilise more private finance where such opportunities exist, and re-direct more public finance resources, notably concessional, to support in other sectors and geographies.

Figure 2. Climate theme of climate finance provided and mobilised in 2016-2021 (USD billion)

Note: Figures may not add up to totals due to rounding.

Source: Based on Biennial Reports to the UNFCCC, OECD Development Assistance Committee and Export Credit Group statistics, as well as complementary reporting to the OECD.

Public finance instruments and private mobilisation

Developed countries’ public climate finance, provided bilaterally and through multilateral channels, reached USD 73.1 billion. As in previous years, loans represented over two-thirds of this total (USD 49.6 billion), grants under 30% (USD 20.1 billion), while equity investments remained marginal. Between 2016 and 2021 the annual level of grants increased by USD 7.9 billion (a 64% growth) and the volume of public loans by USD 16.3 billion (49%) (Figure 3).

Figure 3. Instrument split of public climate finance in 2016-2021 (USD billion)

Note: Figures may not add up to totals due to rounding.

Source: Based on Biennial Reports to the UNFCCC and OECD Development Assistance Committee, as well as complementary reporting to the OECD.

Providers of international public finance deploy different types of leveraging and blended finance mechanisms to mobilise private finance for climate action in developing countries, notably by improving risk-return profiles of projects. Over 2016-21, direct investments in companies and special purpose vehicles, which are typically implemented in the context of large infrastructure projects, mobilised the largest share (41%) of private finance. Guarantees came second (19%) and syndicated loans third (16%). However, the relative share of different mechanisms in total private finance mobilised by developed countries fluctuated year on year. As exemplified in the second part of this report, there are a range of opportunities for international climate finance providers to scale up and better tailor the use of different leveraging and blended finance mechanisms to mobilise private finance more effectively and at scale.

Recipient country groupings

Over 2016-2021, lower middle-income countries (LMICs) were the main beneficiaries, accounting for 43% of total climate finance provided and mobilised. Upper middle-income countries (UMICs) represented 27%, low-income countries (LICs) 9%, and high-income developing countries (HICs; 3%) (Figure 4). As much as 18% of climate finance provided and mobilised by developed countries was unallocated to a specific country, primarily including activities with a regional or multi-country scope.

Figure 4. Climate finance provided and mobilised by developing country income groups in 2016-2021 (%)

Note: As detailed in Annex A, developing countries are here defined as countries either part of the UNFCCC non-Annex I list and/or OECD Development Assistance Committee’s list of Official Development Assistance recipients. This figure does not reflect developing countries’ differences in terms of size, population, and other socio-economic conditions.

Source: Based on Biennial Reports to the UNFCCC, OECD Development Assistance Committee and Export Credit Group statistics, as well as complementary reporting to the OECD.

Looking at countries with special United Nations status, least developed countries (LDCs) benefitted from USD 15 billion of climate finance per year on average during 2016-21 (17% of total climate finance provided and mobilised), and small island developing countries (SIDS) from USD 3 billion (3%). These volumes cannot be added up due to the overlaps between these categories and country income groups.

Overall, the share of climate finance targeting LMICs and UMICs remained stable during the period, whereas the share targeting LICs increased from 4% in 2016 to 10% in 2021. Moreover, the share of climate finance targeting SIDS progressively increased from 2% in 2016 to 4% in 2021, and the share targeting LDCs progressively increased from 12% in 2016 to 25% in 2020, dropping to 20% in 2021. These trends may indicate an increasing recognition by international climate finance providers of the growing needs and opportunities for climate action in poorer and more vulnerable regions. It will be important for international climate finance providers to continue adjusting the geographic distribution of their investment portfolios to ensure alignment with the rapidly changing needs, socio-economic characteristics, and market conditions of developing countries.

Note

← 1.  Year-on-year variations in the thematic split of climate finance provided and mobilised can be influenced by both large individual projects (notably infrastructure) as well as changes in methodologies used by each provider for identifying the climate theme of an activity and for determining its climate-specific amount. Donor countries and multilateral institutions use different methodologies to track mitigation- and adaptation-specific finance.